IRS Releases New Form For 83(b) Elections

Earlier this month, the IRS released Form 15620, a new standardized form for taxpayers seeking to make elections under Internal Revenue Code ("Code") section 83(b). Previously, to make this election, taxpayers needed to execute their own election form, a sample of which was set out in Rev. Proc. 2012-29.

Section 83(b) Elections

Section 83(b) elections are most commonly used in connection with the grant of restricted shares or profit interests in emerging businesses, when the value of the underlying property is expected to increase significantly over time.

Under Code section 83(a), a taxpayer who receives property (e.g., restricted stock) in connection with the performance of services must include the excess of the fair market value of the property over the amount paid (if any) for the property in their gross income when the property "vests" (meaning it is no longer subject to a substantial risk of forfeiture). In practice, this can lead to heavy income